Beware of Cats with Sharp Claws

Posted on September 07, 2016

Last week, the Second U.S. Circuit Court of Appeals ruled in Vasquez v. Empress Ambulance Service, Inc. that the “Cat’s Paw” theory renders employers liable when a low-level employee dupes them into retaliating against another employee who complained of discrimination. What’s significant about the Vasquez case is that the theory was extended to impute a low-level employee’s retaliation to an employer who conducted a negligent harassment investigation.

Everyone knows an employer can’t fire an employee who complains of being sexually harassed at work. Employers have a legal duty to investigate such things, and take action when appropriate. If the complaint is substantiated, the harasser is usually fired or severely disciplined. A good investigation requires both sides of the story and there are times when the accused (or the accused’s workplace allies) make up evidence, lie, or manipulate the investigation to cover up known harassment and poison the employer against the charging employee to turn the table. Who would have thought such drama exists in the workplace? It does, and now employers can be liable for it.

In these cases, the harasser takes action to dupe the employer’s investigators into believing the victim is the real wrong-doer who deserves to be fired or disciplined instead. When successful, the harasser convinces the employer to do his/her dirty work by firing the victim, which is something the harasser can’t do because he/she lacks that authority. The Cat’s Paw theory of liability imputes the co-worker’s retaliation and effort to skew the investigation onto the employer, and makes the employer liable for it even if the person making the actual decision to terminate or discipline the victim is entirely innocent. The Cat’s Paw moniker comes from an Aesop’s Fable and some creative analysis from a well-known federal judge who saw similarities between the fable and the liability theory.

Making an employer liable for a supervisor’s bad conduct stretches no legal boundaries. However, in Vasquez, the supervisor’s hands were clean. Instead, the retaliation came from a co-worker – the very person about whom Vasquez complained. Because the employer allegedly relied on bad evidence to fire Vasquez, the employer may end up being liable for it.

Gray wanted to go on a date with Vasquez, but she didn’t share his feelings. Undeterred, Gray thought sending Vasquez naked pictures of himself might change her mind, so he texted one to her while they were both working. Rightly disturbed and disgusted, Vasquez reported the incident to her supervisor, who instructed her to file a formal complaint under the company’s harassment policy. Vasquez filed the complaint, but, according to her, the company investigators declined her offer to show them the inappropriate text messages and photos Gray had sent her, though they assured her that the kind of behavior she reported was improper.

Gray saw her filling out the complaint form. Probably sensing his employment would soon end, Gray tried to convince another female co-worker to lie for him about Vasquez, but she refused. Gray then altered the text messages on his phone to make it look as if Vasquez had initiated the inappropriate texts, had sent him a racy photo of herself (she hadn’t), and was the one harassing him. Gray did this all in the span of a few hours after he became aware that Vasquez had reported him. Gray even printed these text messages off and had them ready to show the company when investigators contacted him a short time later for his side of the story.

The court case doesn’t explain why the company never asked to see Vasquez’ evidence or even compare the text messages Gray provided to the ones Vasquez offered to show them. Vasquez claimed the company gave full credit to Gray’s version of the events without questioning the obvious problems with his story. The court assumed that if the investigators had just looked at Vasquez’s phone, they would have immediately known Gray had fabricated his evidence to get Vasquez fired. The company fired Vasquez for sexually harassing Gray (according to the lawsuit).

It’s worth noting that the trial court dismissed Vasquez’s lawsuit on a pre-answer motion, which means the employer had not yet stated its position on the claim, partly explaining the reason we don’t know why the employer did what it did. However, the employer now has to hope it can successfully defend a federal lawsuit because the appeals court endorsed her new theory of liability, and that alone should encourage employers to take heed. These things are all about prevention and avoidance, not winning court battles.

Vasquez’s lawsuit alleges that Gray’s retaliation against her should be imputed to the employer under the Cat’s Paw theory, even though Gray was not a supervisor of any kind, and wasn’t the one who made the decision to fire her. The employer argued that it is unfair to hold it liable for retaliation committed by low level co-workers, because such employees have no decision-making power, and since the supervisors in this case were clean, there could not have been any intent by the company to retaliate against Vasquez.

Although the supervisors were clean, the court said it didn’t matter, holding that the employer “was itself negligent in allowing Gray’s false allegations, and the retaliatory intent behind them, to achieve their desired end . . .” and therefore liable for Gray’s retaliation. In other words, the company didn’t retaliate – the harasser did – but now the company can be liable for it.

The lesson is clear – an employer who conducts a negligent investigation into complaints of workplace discrimination and allows itself to be duped by an employee with a motive to lie, becomes responsible for that employee’s bad acts. This means employers have to be very careful to conduct a thorough investigation into, and not just gloss over, these complaints. Employers must know how to properly investigate discrimination claims, and how to document the results, presuming in all cases it will have to defend not just its decision – but the procedure behind it. Courts have long held that an employer is not liable just because they get it wrong and fire the wrong person – but that assumes the employer reached that decision after a responsible investigation. Now the employer’s process is going to be scrutinized along with its final decision.

For questions regarding Ohio’s sexual harassment laws, or other business law issues, please contact the attorneys at Harpst Ross, Ltd. – Business Lawyers for the Construction Industry®, at (330) 983-9971.

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